Global technology stocks were under pressure on Wednesday as fading concerns about the Omicron coronavirus variant and bets on interest rate rises lowered the appeal of groups that have prospered throughout the pandemic.

Hong Kong’s Hang Seng index dropped 1.6 per cent, with its technology subsector losing 4.6 per cent. It marked the worst fall for tech shares traded in the city since July.

The move in Hong Kong echoed trading on Wall Street on Tuesday, with futures markets suggesting US tech stocks could drop for a second day.

Contracts tracking the Nasdaq 100 index edged 0.4 per cent lower after Wall Street’s tech-focused share gauge fell 1.3 per cent in the previous session.

Shares in electric car maker Tesla dropped 1 per cent in pre-market trading while Microsoft edged 0.3 per cent lower and Apple was flat.

In Europe, the Stoxx 600 equity gauge rose 0.1 per cent while its tech sub-index slipped about 0.1 per cent lower. ASML, the Dutch semiconductor equipment maker and Europe’s largest tech company by market capitalisation, dipped 0.2 per cent following a fall of almost 3 per cent on Tuesday.

Tech stocks have fallen out of favour after early data suggested Omicron was less likely than previous strains to result in hospitalisations and therefore widespread lockdowns.

“The Omicron variant seems fairly mild, with surging cases not resulting in higher fatalities, raising hopes that the end of the pandemic is in sight,” said Emmanuel Cau, head of European equity strategy at Barclays.

This optimism has this week boosted shares of so-called cyclical businesses — companies whose fortunes are tightly linked to economic trends — such as banks and energy producers.

Constituents of Wall Street’s $11.3tn FANG+ index, such as Apple and Amazon, have been the biggest publicly traded winners of the pandemic, measured by growth in market capitalisation in dollar terms since January 2020, according to a Financial Times study.

The FANG+ group constitutes 27 per cent of the S&P 500, according to Bloomberg data based on Tuesday’s closing prices.

“Even if global equities give a reasonable return this year, the US market will struggle,” said Paul Jackson, head of asset allocation at Invesco.

Because of the dominance of big tech companies in the index, he added, the S&P had “become a market that outperforms during economic downswings”.

While tech groups’ prospects have been boosted by lockdowns and other social restrictions, their valuations have also been flattered by ultra-low bond yields that reduce the opportunity cost of owning growth companies that pay minimal or no dividends.

Traders have also this week backed out of US Treasuries, the haven assets favoured in times of economic uncertainty, lowering prices of the debt instruments and pushing their yields higher.

Officials at the US Federal Reserve, which is winding down its pandemic-era monetary stimulus, expect the central bank to raise interest rates three times this year, according to projections published late last year.

The yield on the benchmark 10-year US Treasury, which moves inversely to the price of the debt, inched 0.02 percentage points lower to 1.646 per cent on Wednesday but has climbed from about 1.5 per cent on December 31.

Elsewhere in markets, the UK’s FTSE 100 rose 0.2 per cent after gaining 1.6 per cent on Tuesday, thanks to its high concentration of banking, energy and resources businesses. Germany’s Dax advanced 0.6 per cent, boosted by consumer and industrial stocks.

Brent crude was steady at $80 a barrel. The oil benchmark dropped as low as $69.28 in late December, depressed by Omicron concerns.